A Value Investment

Dave Martin rebounded today after learning that his annual earnings will increase next year by 2.5%. Mired in a five-year decline, the value of the long term government employee may be seeing an unexpected turnaround.

Not surprisingly, Dave Martin did not realize the explosive growth experienced by many of his contemporaries during the boom years of the 1990s. Given his employment inertia, Mr. Martin remained in the same position throughout that bullish decade.

Once touted as a long term "value" investment, Mr. Martin even failed to meet that limited expectation. Due to government salary freezes throughout part of the nineties and Mr. Martin’s insistence on owning a house and driving a vehicle, annualized returns were well below the rate of inflation.

Those looking to Mr. Martin as a safe, secure investment were disappointed. Chief among those investors were his wife and daughter who were forced to suffer through the last ten years with used cars, discount Barbies and an outdated, avocado-green stove.

But all that may now be changing. Trading at an historically low P/E multiple, analysts see nothing but upside in Martin futures.

The recent salary increase of 2.5% sparkles in comparison to many other issues. And Mr. Martin’s limited lifestyle expenditures ensure that he will experience real growth in the near term.

Despite Mr. Martin’s propensity for investing excess cash in underperforming mutual funds, analysts claim there is real value underlying his position. Although they discount Mr. Martin’s core competencies, they do give full marks for his longevity. Apparently if Mr. Martin can maintain his current minimal performance level for another ten years, he will realize significant indexed pension earnings.

Thus, while the market is not yet bullish on Dave Martin, it is clear that there is money to be made there. If Mr. Martin were wound up today, insurance, pension and severance payments would yield a tidy return to anyone who had hung tough over the last twenty years. In the words of Mr. Martin’s wife, "I’ve always said that he was worth more liquidated than as a going concern."